Nigeria Must Fight Corruption

By

Adekunle Ajisebutu

ajisebutu@shaw.ca

Events in the past three weeks in Nigeria have raised hope about the government willingness to fight corruption.  The President of the upper house, the Senate, was removed from office, and two ministers, Education and Housing were sacked, one for giving bribe to the senators, including the senate president, and the other for improper handling of government properties at Ikoyi, Lagos.  There is a chance these people will may face trial.  To my surprise, I saw the former Inspector General of Police, Mr. Tafa Balogun, in handcuffs, and was not surprised that the President had to intervene.  He did not see why a “Big Man” should be so humiliated. 

When you closely examine the huge amount, N13 billion, that Balogun was accused of embezzling you begin to imagine how Nigeria and Nigerians have been short changed by the people placed in position of authority.  Imagine how far N13 billion, an equivalent of US$93 million, will go in infrastructure development.  Imagine 100 of Tafa Baloguns in Nigeria and you will agree with why the Western world has refused to grant Nigeria’s wish for a debt relief.  How can a man be that greedy in the midst of poverty?  The President questioning of the EFCC boss over the handcuffs puts a question mark on his sincerity to fight corruption.

The President in his public statements this weekend, April 10, 2005 reiterated his commitment to fight the “hydra-headed monster” called corruption.  The President is even ready to fight the malaise with unconventional means.  It will be interesting to know what that entail.  The President went further to ask traditional rulers to withdraw chieftaincy title from corrupt officials.  I believe he should lead the charge by withdrawing national honor from corrupt officials.  For a start, Mr. Tafa Balogun’s CFR award.

Now, the big questions are:  Is the President playing to the gallery and trying to impress some forces?  Is he serious about fighting corruption?  Does he have the moral standing to fight corruption without being consumed in the process?  Will the President be bold to take the battle to some people in certain parts of the country if they are found to be involved in corruption i.e., some powerful elites from Kano power base?  Will the President be bold to take the battle to former military head of state(s) with well known record of corruption?  This questions become pertinent given the President past performance in this area since he assumed office.  It will be recall that the President assured us in 1999 that his administration is determined to fight corruption in all places including the high places.  Yet, we hear of “Ghana-Must-Go” bags from the Presidency to the Senate; unresolved high profile assassination; the reported and alleged  rigging that pervaded the 2003 election; police extortion; misappropriation of money meant for oil refinery turnaround maintenance; oil bunkering etc.

The purpose of this article is to answer why Nigeria must fight corruption.  Yes, Nigeria must fight corruption because corruption has no place in a capitalist system and economy.  The effect and impact of corruption results in an imbalance in the economic system, and it is directly responsible for the cancer called INFLATION.  When I left Nigeria in 1992, my annual salary was about N60, 000.  According to information reaching me, the same position now gets paid about N100,000 a month, not a year.  This translates to an annual salary of N1.2 million a year.  Imagine how much inflation has eroded the value of money.  When I was in Nigeria, 13 years ago, N50 was a lot of money, you can feed on it for a day; I have been told I need about N2,000 for a good lunch compared to N20 in 1991.  How does corruption result in inflation?  I will explain it by my rudimentary economics.  This rudimentary economics posit that economy, in a capitalist system, sits on a two-legged stool.  One side of the stool is what I will call PRODUCTIVITY and the other side is MONEY.  To explain this economic model of mine, you have to assume that the money in circulation is represented by what you and I get paid for the hard work of creating goods and services, and that is all the money available.  For the economy to be stable, there must be a balance between the two sides.  The imbalance manifests itself in INFLATION or DEFLATION.  The worst is inflation.  The productivity side, in simplistic term, is represented by goods and services produced through hard work and industry of the people. The money side is the money earned by those who produced goods and services on the productivity side.  Where people start making money from means outside this model, then an imbalance sets in.  If everybody starts collecting bride, 10% graft from contract, police and custom collecting money from importers and exporters, messengers collecting bribe before they locate files etc, these are money that is not supported by productivity or production of goods and services.  In essence, you will have more money in circulation than goods and services produced from hard work and industry, thereby creating artificial demand that outstrips supply.  In effect, you have lots of money chasing few goods.  In essence, you have inflation.

It is my submission that the in-balance in Nigeria is from excess money in circulation. I mean the excess money that cannot be supported by productivity or genuine economic activity, and must be checked by the government to bring sanity to the system.

If you disagree with my model, then think about this scenario.  You are a hard working young man.  In the course of looking forward, you plan to own a house in the nearest future.  Currently, a house goes for $80,000 in your area.  Suddenly, house price starts climbing and there are no economic indicator(s), i.e., a sharp drop in interest rate to support the rise in house market.  And before you know it, the same house has gone up to $250,000.  You wonder why, and found out that drug dealers are the ones buying the houses and pushing up the price.  In essence, money that cannot be supported by hard work has invaded your community and your dream of buying a house has been shattered because your salary has not changed significantly.  There is no difference between drug money and bribe money, they are both unsupported by genuine economic activity.  They both create artificial demand, and consequently, inflation.  Why did governments in the West world fight illegal drug trafficking?  They are not doing it because it is a moral thing to do, they are protecting their economy from bad money.

If you disagree again, think of a situation where a supplier supplies raw material to a manufacturer at say $1,000 a piece, and the Purchasing Manager demands 10% graft.  To make profit, the supplier will have to increase the price by the 10% bribe.  The increase in cost of supply will go into cost of production and finally pass on to the consumers in increase price.  If this is a common practice everywhere, you will get what the economics called cost-push inflation.

Now corruption goes one step further to destroy a country.  It destroys the moral fabric that makes a strong country and people.  The debasement of moral values is the beginning of the end for any country.  In the scenario above, if the scourge of drug money is not checked, a time will come when the young man will ask himself:  Why am I working so hard to earn a living when the boys buying the houses are not as smart?  In Nigeria today, money is being worship like god.  You could be poor today and become a “big man” tomorrow.  Nobody ask questions.  There is a serious rat race.  It explains why we have rouges as lawmakers.  People go into government poor and come out rich, and nobody ask question.  Instead, they become heroes and heroines.  No nation can survive such depraved moral value for a long time.

Last week, the US ambassador to Nigeria explains why Nigeria is not a magnet for foreign investment.  He cited corruption and lack of infrastructure.  He said corruption has increased the cost of doing business in Nigeria.  He is right.  How do you account for the bribes and extortion?  In business you have to report them as expense or cost of doing business.  If you are a multi-national business, you compare cost of doing business in country A and B and make strategic business decision.  The lack of infrastructure like energy and roads which is a direct result of corruption also escalates cost of doing business.  If you have to run the business with a generator, you will pay more than those who operate with hydro.

Nigeria holds a strategic position in the world.  It is a shame that a country like Ghana just celebrated 2 years of uninterrupted power supply while NEPA supply of power is a dismal failure, all because of corruption.

Yes, Nigeria must fight corruption, but can Obasanjo do it?  We’ll see.